All in this together, eh? Starbucks and Amazon treat us like fools over tax avoidance

Pity poor Starbucks. The plucky little company has spent 15 years struggling to make a profit in Britain and, do you know what, they’ve only managed it once, in 2006.

What with their ’31 per cent market share’ you may think this is scarcely believable. They have 800 stores across the country, plans for 300 more creating 5,000 jobs, so for a company that makes no money they are trying awfully hard. But they just can’t make it work. Something doesn’t click. It’s hard not to feel sorry for these coffee pioneers.

Well, that’s the sob story that Troy Alstead, the firm’s global chief financial officer, laid before MPs on the Public Accounts Committee. Mr Alstead claimed the firm’s ‘profitability problems’ partly stemmed from Britain’s high rent costs and competition. And he repeatedly denied accusations the firm participated in any tax avoidance schemes.

‘Absolutely not,’ he cried. ‘We are not at all pleased about our financial performance here. It is fundamentally true everything we are saying and everything we have said historically. We are not aggressively looking to avoid tax.’

Oh, by the way, he did admit one reason why the British company pays royalties to a firm in Amsterdam was the Dutch offered ‘an attractive’ tax deal. And they buy all their coffee in Switzerland. I can’t think why.

The leaders of big business… demonstrated why, when we can, we should pick the independent coffee seller and the high street book shop above these dreary conglomerates

Then the committee heard from Amazon’s public policy chief Andrew Cecil who, with remarkably understated brilliance, was even less convincing than the Starbucks’ representative.

Lack of basic knowledge: Amazon’s public policy director Andrew Cecil was criticised for not knowing the answer to straightforward questions (Picture: Reuters)

We, and the committee, are expected to believe that from its €9billion revenue in Europe last year, the company made only €20million profit after tax. He denied Amazon played a part in closing bookshops. Mr Cecil didn’t know who owned the Amazon holding company. And he revealed the company didn’t break down revenue on a country-wide basis; why this obfuscation? I’ll leave that for you to consider.

Melanie Ward, head of advocacy at ActionAid, which has campaigned vociferously against tax avoidance in recent years, said the hearing ‘shows once again how, for big companies, paying taxes is becoming almost optional’.

She added: ‘This problem is a global one and developing countries are hardest hit, losing more money to tax havens each year than they receive in aid.’

And she called for the government to use the spring Budget to give ‘HMRC serious powers to identify this practice wherever it occurs’. The prime minister, she said, ‘has the perfect opportunity to do this as host of next year’s G8 summit in London. Anything less risks being a sticking-plaster that offers no real solution.’ We can hope, I suppose, but I’m not holding my breath.

What these leaders of business did was treat us as fools. But at the same time, they did provide us with a valuable service. They demonstrated why, when we can, we should pick the independent coffee seller and the high street book shop above these dreary conglomerates. For that reason alone I thank them.

One final thing. When you order a book from Amazon, it doesn’t come from a warehouse. No, it comes from one of eight ‘fulfilment centres’ dotted around the UK. For a company which has made its fortune selling books, it shows scant regard for language. For that reason alone the firm deserves our contempt.

Metro Blogs is a place for opinions. These opinions belong to the author and are not necessarily shared by Metro.